FX.co ★ UK Inflation Falls to 3.0% in January

UK consumer price inflation slowed to 3.0% in January 2026, down from 3.4% in December and in line with market expectations. This is the lowest annual rate since March 2025, largely reflecting weaker increases in transport and food costs. Transport prices rose by 2.7% year-on-year, easing from 4.0% in December, as fuel prices declined and air fare inflation cooled. Food and non-alcoholic beverage prices were up 3.6%, compared with 4.5% a month earlier. Inflation also softened in housing and utilities (4.5% vs. 4.9%) and recreation and culture (2.6% vs. 2.7%). By contrast, price growth in restaurants and hotels picked up to 4.1%, from 3.8% in December. Core inflation, which strips out more volatile components such as food and energy, fell to 3.1% in January—its lowest level since August 2021—indicating that underlying price pressures are steadily easing. On a monthly basis, consumer prices declined by 0.5%, reversing the 0.4% rise recorded in December.